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Leonardo S.p.A.

Investor Presentation • May 5, 2016

4038_10-q_2016-05-05_f6b8e8c4-a87a-4d78-ac5c-85af35946365.pdf

Investor Presentation

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1Q2016 ResultsPresentation

Gian Piero Cutillo

Chief Financial Officer

5 May 2016

Key messages

  • Solid start to the year reflecting a better balanced business
  • Continuous improvement in Electronics, Defence & Security and Aeronautics
  • Offsetting increasingly challenging Helicopters market
  • Material step up in Net Result
  • FY expectations confirmed
  • Very positive incremental impact from EFA Kuwait contract

New OrdersIn line with 1Q2015, with book-to-bill at 1

Revenues

In line with 1Q2015 despite the change in perimeter

Profitability improvement Growing EBITDA and 210bp higher EBITDA Margin YoY

Profitability improvement Sustainable growth of EBITA and ROS

Net ResultMaterial step up of EBIT and Net Result

Eurofighter Kuwait contractPreliminary impact on Group figures

  • Contract signed on April 5th 2016 with the Kuwait Ministry of Defence for the supply of 28 EurofighterTyphoon in the most advanced configuration, including the cutting-edge new E-Scan radar
  • Leonardo as prime contractor will lead all the activities on behalf of the Eurofighter Consortium. As such, our share is approx. 60% of the total value of the contract (approaching € 8 bln) while the remaining 40% are just pass-through activities
  • 8-year contract, covering 2016-2023 period. All the production, delivery and acceptance will be in Italy in the facilities of the Aircraft Division. Deliveries will start in 2019
  • Preliminary impact of the contract on the Group key data as follows:
  • ORDERS: 2016 will reflect the entire amount of the contract, to be booked in 2Q or 3Q depending on when the first installment of the downpayment will be received
  • REVENUES: meaningless contribution in 2016, ramping up in 2017-2018 to reach the peak in 2020-2021 of approx. € 2bln per year
  • EBITA: consistent with Revenues profile, in terms of margins we don't expect the contract to be dilutive in 2017-2018 while only marginally from 2019 onwards as Revenues peak up
  • 8FOCF: the net impact of the downpayment will lead to an improvement of Group FOCF in 2016 (€200 mln) and 2017 (€ 400 mln). As typical for this kind of contracts, cash absorption is expected as the deliveries start, due to the build up of the Working Capital

FY2016 GuidanceUpdated to factor in the impact of the EFA-Kuwait contract

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(*) Assuming €/\$ exchange rate at 1.15 and €/£ at 0.75

MORE BALANCED TODAYContribution to 2016 Guidance*

SECTOR RESULTS

HELICOPTERS

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  • Challenging market conditions in some relevant segments affecting order intake in 1Q2016.
  • 1Q2015 benefitted from UK AW101 IOS contract
  • Double-digit profitability maintained
  • This Sector confirmed to be affected by challenges in Oil&Gas, extending across the other civil markets, coinciding with the introduction of some of our new products
  • We continue to expect solid performance with profitabilitysteadily at double digit

ELECTRONICS, DEFENCE & SECURITY SYSTEMS

(Now includes Defence Systems as a Division , DRS and MBDA)

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Good commercial performance with major orders inLand & Naval Defence Electronics and DRS

  • Sharp improvement in profitability supported by efficiency improvements and recovery of industrial profitability in theSecurity & Information Systems Division
  • Profitability expected to further improve, despite a more competitive environment and the winding downof some profitable programmes, supported by increasing benefits coming from industrial processesimprovements (Manufacturing, Engineering and Supply Chain)
  • For DRS, excluding the effect of the change in perimeter (ca.€200mln YoY), we continue to expect positive trend in business growth, even in a more competitive environment, and a further increase inprofitability

AERONAUTICS

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  • Significant level of new orders both in Aircrafts (9 additional M-346 to the Italian Air Force) and Aerostructures(B787), recovering the postponements that affected 4Q2015
  • Higher EBITA driven by improvement inAerostructures
  • 2016 profitability expected to further improve driven by additional efficiency-improvement and cost reduction actions also offsetting the winding down of some high-margin programmes. EFA Kuwait contract expected to boost Orders (approaching €8 bln)

SPACE

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  • Good performance in Manufacturing, with higher volumes and better profitability offsetting lower margins inServices
  • EBITA and profitability expected to recover in 2016

GROUP PERFORMANCE

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17Free Operating Cash-Flow (FOCF): this is the sum of the cash flows generated by (used in) operating activities (which includes interests and income taxes paid) and the cash flows generated by (used in) ordinary investment activity (property, plant and equipment and intangible assets) and dividends received.

Disciplined financial strategy aimed at cash flow improvement and Net Debt reduction

18

  • Further improvement in profitability based on industrial performance
  • Operating working capital management
  • Investment under control

Combined effects lead to

  • Increase in FOCF
  • Net Debt reduction and improvement in D/E and Net debt/EBITDA

* includes €54mln of disposals

FINANCIAL POSITION as of end of March 2016

  • No refinancing needs before end 2017
  • Strong liquidity position
  • Bonds have neither financial covenants nor rating pricing grids
  • KeyMessages
  • Average life > 7 years
(
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Availability of

adequatecommitted

liquidity lines

LIQUIDITY POSITIONas of end of March 2016

In order to cope with possible swings in financing needs, Finmeccanica can leverage:

  • 31 March cash balance of approx. €0.9Billion
  • Credit lines worth €2.8 Billion (confirmed and unconfirmed)
  • The Revolving Credit Facility was renegotiated on 6 July 2015 lowering the margin from 180bps to 100bps. The renegotiated facility has an amount of €2.0bn and will expire in July 2020
  • Bank Bonding lines of approximately €3.4 Billion to support Finmeccanica's commercial activity

(1) Based on rating as of 31/03/2016

(2) Average. Expected to be renewed at maturity

SAFE HARBOR STATEMENT

NOTE: Some of the statements included in this document are not historical facts but rather statements of future expectations, also related to future economic and financial performance, to be considered forward-looking statements. These forward-looking statements are based on Company's views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Given these uncertainties, you should not rely on forward-looking statements.

The following factors could affect our forward-looking statements: the ability to obtain or the timing of obtaining future government awards; the availability of government funding and customer requirements both domesticallyand internationally; changes in government or customer priorities due to programme reviews or revisions to strategic objectives (including changes in priorities to respond to terrorist threats or to improve homeland security); difficulties in developing and producing operationally advanced technology systems; the competitive environment; economic business and political conditions domestically and internationally; programme performance and the timing of contract payments; the timing and customer acceptance of product deliveries and launches; our ability toachieve or realise savings for our customers or ourselves through our global cost-cutting programme and other financial management programmes; and the outcome of contingencies (including completion of any acquisitions and divestitures, litigation and environmental remediation efforts).

These are only some of the numerous factors that may affect the forward-looking statements contained in this document.

The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely.

Investor Relations & Sustainable Responsible Investors (SRI)

Contacts

Raffaella Luglini

Head of Investor Relations & SRI+39 06 [email protected]

Valeria Ricciotti

Financial Communication+39 06 [email protected] Alessio CrosaFixed Income+39 06 [email protected]

2015 Annual Results

ANNUAL REPORT 2015 PRESS RELEASE VIDEO-WEBCASTQuick links

[email protected] www.leonardocompany.com/investors

22We do business in a sustainable manner, with a continued commitment to economic and social development and the protection of public health and the environment.

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